Cov-Lite Law and Legal Definition

Cov-lite is a financial jargon for loan agreements. Cov-lite does not contain the usual protective covenants for the benefit of the lending party. It is a type of loan whereby financing is given with limited restrictions based upon the debt service capabilities of the borrower. The issuance of cov-lite loans means that debt is issued both personally and commercially to borrowers with less restriction on collateral, payment terms, and level of income. It is also known as covenant-lite loans.